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CNN Live At Daybreak

U.S. Forces, Militiamen Loyal to Radical Shiite Cleric Muqtada Al-Sadr Locked in Fierce Battle; Two Bomb Blasts in Istanbul, Turkey

Aired August 10, 2004 - 05:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


CAROL COSTELLO, CNN ANCHOR: In Iraq this morning, a radical Shiite cleric's militia refuses to relent. This morning, the possibility of a full scale U.S. offensive.
It is Tuesday, August 10.

This is DAYBREAK.

And good morning.

From the CNN Global Headquarters in Atlanta, I'm Carol Costello.

Now in the news, there is fresh fighting this morning in Iraq's holy city of Najaf. U.S. forces have been battling Shiite militiamen there for six days now. Explosions and gunfire are being heard in the heart of Najaf.

They have released their final report. Now they say it's time to act on it. Several hours from now, the leaders of the panel that probed the 9/11 attacks will appear before a House committee. They'll be urging Congress to implement the report's recommendations.

Star prosecution witness Amber Frey takes the stand today. Frey was Scott Peterson's mistress when his wife Laci disappeared. The focus today will be on phone calls with Peterson that she secretly recorded.

Tropical storm Bonnie is lying over the ocean, so to speak. The storm is expected to start moving north some time today. Bonnie took shape Monday in the southern Gulf of Mexico.

Keeping you informed, CNN, the most trusted name in news -- Chad.

CHAD MYERS, CNN CORRESPONDENT: Why are you doing the weather? That was my job. That was my map.

COSTELLO: You know I like to hog the limelight.

MYERS: Good morning, Carol.

COSTELLO: Good morning.

MYERS: Yes, Bonnie now. Bonnie is in the Gulf of Mexico and there's Charlie down here across parts of the eastern Caribbean, south of Puerto Rico, south of Jamaica, on the other side. This is the one we're worried about, though. This is Bonnie. Not a very impressive looking storm, running into some very dry air out here. But it's forecast to make a big right-hand turn and head right toward Panama City, with winds about 80 miles per hour by the time it gets there. We'll have to keep watching it. It is now forecast to be hurricane Bonnie before it makes landfall. Yesterday, that was not the case. Still only a tropical storm right now. Winds at about 45 miles per hour.

The hurricane hunter aircraft have been in Bonnie all night long. They have not found any intensification. It's still between 40 and 45 miles per hour and the pressure is not getting any lower, which means it's not getting any stronger.

(WEATHER REPORT)

COSTELLO: There is new fighting this morning in Najaf. U.S. troops are again battling Shiite militia in the heart of the holy city. Explosions and gunfire are heard and smoke is seen rising during the morning clashes. You are looking at pictures just into CNN a short time ago.

Our Matthew Chance reports from Baghdad on this latest battle.

(BEGIN VIDEO TAPE)

MATTHEW CHANCE, CNN CORRESPONDENT (voice-over): The holy city of Najaf, now Iraq's worst battleground. In five days U.S. forces, backed by Iraqis, say they've killed more than 360 Mehdi Army fighters here. They're loyal to radical Shia cleric Muqtada al-Sadr now publicly rejecting any negotiation while U.S. troops remain.

MUQTADA AL-SADR, SHIA CLERIC (through translator): I will continue with resistance and I will remain in Najaf. I will not leave. I will continue to defend Najaf as it is the holiest place. I will remain in the city until the last drop of my blood has been spilled.

CHANCE: In Baghdad, too, the Mehdi Army is taking a stand. In Sadr City there have been terrible clashes with U.S. forces but here the militias hijack a police station. Not a shot was fired. Inside the barracks, they rifle through cabinets for useful equipment. Body armor meant to protect the police is stolen. Still, the interim Iraqi government says it's keen to get this militia and its leader to join a political process they've so far rejected.

GEORGE SADA, IRAQI GOVERNMENT SPOKESMAN: You see always the best solution is even not to fight but after we fight the best solution is to cease fire, stop fire and make negotiations.

CHANCE: But there's another way too, fight to the end, and U.S. troops now massed in Baghdad and with full authority in Najaf may be poised to finish it.

(on camera): This confrontation has potentially explosive consequences for Iraq. Reports from Najaf say the fighting is now focused around the Imam Ali Mosque, one of the holiest shrines in Shia Islam where U.S. forces say the Mehdi militia or units of them are holed up inside and launching attacks against U.S. forces there. A strike against that mosque could unleash a very serious backlash amongst this country's majority Shia community.

(voice-over): And, a wrong step could unleash among Iraq's majority Shia a ferocious backlash.

Matthew Chance, CNN, Baghdad.

(END VIDEO TAPE)

COSTELLO: Fighting terror on the home front -- Congress is holding hearings on the 9/11 Commission's recommendations to fight terrorism. Well, just about seven hours from now the panel's co- chairmen are expected to encourage the House Armed Services Committee to implement their recommendations.

And there are questions this morning about the response of Las Vegas government, hotel and casino officials to a possible terrorist threat. The Associated Press says city officials and hotel security personnel were more concerned about tourism and liability than terrorism when informed of videos suggesting terrorists had cased the city's casinos. No public alert was issued.

The city's mayor says he never even knew about the tapes.

(BEGIN VIDEO CLIP)

MAYOR OSCAR GOODMAN, LAS VEGAS, NEVADA: If there's anything that the federal government has that would reflect on the wellbeing and the public safety of folks who live here and folks who visit here and they have not shared it with me and allowed me to go out and tell the world that we're the safest place, they're derelict and they're guilty of malfeasance, misfeasance and they should be imprisoned.

(END VIDEO CLIP)

COSTELLO: Those tapes show al Qaeda operatives videotaping casinos in 1997.

Across the country in Albany, New York, more efforts at finding terrorism. Two mosque leaders arrested in an FBI sting operation last week appear in court today for a bail hearing. They're accused of conspiring to launder money and promote terrorism. The sting involved the plot to obtain a shoulder-fired missile.

New attacks just north of Iraq in Turkey this morning. Two simultaneous explosions rocked two hotels in Istanbul. Two people are dead, seven wounded.

Our Alphonso Van Marsh joins us live on the phone from Istanbul.

Tell us about the fighting there -- Alphonso.

ALPHONSO VAN MARSH, CNN CORRESPONDENT: That's right, I am in front of one of those hotels targeted overnight here, where, as you mentioned, two people were killed. Turkish authorities saying that the two bomb blasts went off at about 1:00 local time. Authorities saying that the local hotel employees got a call maybe just about 10 minutes before those bomb blasts went off, warning them that there was a bomb in one of the rooms.

As you mentioned, two people died. At least seven injured, including non-Turkish nationals, we're understanding, nationals from China, from Holland, the Ukraine.

Where I'm looking right now, they're still very, very busy. Large groups of tourists here. This is the height of the tourist season in Istanbul and in Turkey, and news that these bomb blasts apparently targeting hotels becomes very unnerving, especially considering that earlier on the chief of police in Istanbul told the state run news agency that they believe this is an act of terror.

COSTELLO: I was just going to ask you, Alphonso, who might be behind these attacks?

VAN MARSH: Well, authorities aren't saying anything right now in terms of any known claim of responsibility. We know that the minister of interior is meeting with the governor of Istanbul. We heard a little earlier on from the chief of police of Istanbul, saying that they believe it's a terror attack. But in terms of whether it may be Al Qaeda or other known terrorist elements in the country, that's still unclear.

Some of our viewers might remember that last November there were four suicide car bombings in Istanbul. Over 60 people were killed, including the British consulate in Istanbul. But in terms of any definite terrorist threat, people aren't saying at this point. Just that they suspect that this is terrorism.

COSTELLO: Tell our viewers, Alphonso, why Turkey might be a terrorist target.

VAN MARSH: That's a good question. In terms of Turkey being a terrorist target, it's important to keep in mind that Turkey is what many consider to be the crossroads of Western and Eastern civilization. The country is very keen to join the European Union. That's a very large organization. It's the only Muslim member of NATO. It's a huge popular tourist destination as well as a traditional, for lack of a better term, ally of Israel. They do a lot of business between the two countries. They maintain friendly relations.

You can pick any number of reasons why some would want to consider this a terrorist target. But right now authorities aren't saying, they aren't assigning blame to any particular group.

COSTELLO: Alphonso Van Marsh live on the phone from Istanbul this morning.

Thank you. In news across America this Tuesday, an Ohio woman is suing doctors at the Cleveland Clinic after it was discovered they left a surgical towel inside of her mother. Bonnie Valle died in 2002, seven years after having lung surgery at the clinic. The 18 x 27 inch towel was discovered by medical students who were dissecting the donated body.

Police want to know why a North Carolina teenager had six pipe bombs in his car. Seventeen-year-old Jarrett William Brown was stopped for leaving the scene of an accident. Federal agents then searched the boy's home, where they found more than a dozen similar explosives, as well as bomb making equipment.

Mark Hacking is expected to appear in court today to face charges in the murder of his wife. Court papers say he shot his wife Lori Hacking while she slept and then threw her body in a trash bin. He has been charged with murder and obstruction of justice. The charge carries a maximum life in prison term. Lori Hacking's body has not been found.

Now to the latest in that brutal killing rampage in Florida. State officials have fired four long time state workers. They say the workers missed two chances last week to put in jail the ex-con accused of leading the rampage. Troy Victorino is accused of recruiting three teenagers in the killings. The six victims were found Friday, stabbed and bludgeoned with baseball bats in a blood spattered Deltona home. Officials say Victorino should have been behind bars.

(BEGIN VIDEO CLIP)

JAMES CROSBY, CORRECTIONS SECRETARY: I've learned that Victorino reported to a probation office on Thursday, August the 5th. But the probation officer failed to ask for or seek a warrant for his arrest. There is no excuse for this inaction.

(END VIDEO CLIP)

COSTELLO: Authorities say a dispute over an Xbox video game system and some clothes sparked the killings.

It is the testimony everyone has been waiting for, or so it seems. Scott Peterson's mistress is scheduled to take the stand today.

CNN's Ted Rowlands takes a look at what Amber Frey may reveal while she's on the witness stand.

(BEGIN VIDEO TAPE)

UNIDENTIFIED FEMALE: You're not going to be giving her...

TED ROWLANDS, CNN CORRESPONDENT (voice-over): The conversations Amber Frey secretly taped with Scott Peterson are expected to be at the heart of her testimony, which is scheduled to begin in the morning.

According to Frey's attorney, Gloria Allred, those audiotapes will have an impact on this case.

GLORIA ALLRED, AMBER FREY'S ATTORNEY: The prosecution can argue that there is a motive for murder, and we will see how Scott Peterson wormed his way into her life and into her heart.

ROWLANDS: Frey, according to a source familiar with the case, has been in Redwood City since Sunday, going over testimony with prosecutors. Her father says she's ready.

RON FREY, AMBER FREY'S FATHER: She's 100 percent prepared, and she'll be able to deal with questions from the defense attorney, Mr. Geragos. Not a problem.

ROWLANDS: Amber Frey started taping conversations with Peterson six days after his wife, Laci, was reported missing. Sources familiar with the recordings say that Peterson told Frey dozens of intricate lies that are captured on tape.

CHUCK SMITH, LEGAL ANALYST: The more bizarre, the more strange his statements to her are, the better it is for the prosecution.

ROWLANDS: Meanwhile, CNN has learned that the focus of what the defense in this case is calling potentially exculpatory evidence revolves around a plastic tarp recovered with Laci Peterson's remains. According to a source close to the case, the first authorities on scene said the tarp smelled like a corpse. The defense is testing that tarp and maintains that if the tarp was used in the crime, it may help to clear Scott Peterson.

(on camera): Amber Frey is scheduled to be the first witness in the morning. It is expected that she will be on the witness stand for more than a week.

Ted Rowlands, CNN, Redwood City, California.

(END VIDEO TAPE)

COSTELLO: We will have much more on the Peterson case coming up in the second half hour of DAYBREAK. Our legal analyst Kendall Coffey will join us for some Coffey Talk and talk about the impact Amber Frey's testimony may have on the jury.

Let's take a look now at something that's probably driving you absolutely nuts -- spam. You know those pesky unsolicited e-mails? Some try to sell you stuff by making false claims. Others are just plain vulgar or pornographic.

Last year, President Bush signed an anti-spam law. But some say it is not working.

(BEGIN VIDEO CLIP)

MICHAEL GOODMAN, BUREAU OF CONSUMER PROTECTION: Canned Spam is not going to affect the amount of messages that consumers receive to any large degree. We have said all along that legislation, whether it be Canned Spam or something else, is not going to be the silver bullet for the spam problem.

(END VIDEO CLIP)

COSTELLO: That certainly brings us to our e-mail question of the morning -- who should be responsible for policing Internet spam? E- mail us at daybreak@cnn.com and we will read your responses throughout the morning. Again, who should be responsible for policing Internet spam? E-mail us at daybreak@cnn.com.

Staying in the game even after throwing in the towel. Meet some athletes who are holding onto Olympic dreams despite no hopes of competing. That's at 18 minutes past the hour.

At the bottom of the hour, political donors find out what big businesses are buying with their huge campaign contributions.

And at 48 minutes after, it looks like separation success. Formerly conjoined twins are recovering better than doctors dared to expect.

But first, here's a look at what else is making news this Tuesday morning.

(COMMERCIAL BREAK)

COSTELLO: U.S. stocks will open flat this morning, as investors are a little uncertain about today's expected interest rate hike. The Dow closed just above 9814. The Nasdaq dipped 2 1/4 points, to close at about 1775. And the S&P 500 ended at 1065.

Let's take a look at some overseas numbers, too. Japan's Nikkei closed up nearly 45 points. In Europe, Britain's FTSE Index was up about 23 points and the French CAC was up just over 12 points.

Your news, money, weather and sports.

It is 5:17 Eastern.

Here's what's all new this morning.

Two surveillance tapes seized after 9/11 reportedly show terrorists cased Las Vegas casinos. But the Associated Press says it obtained documents showing discussions between local and federal officials did not center on public alerts or beefed up security. Instead, authorities worried about tourism legal liabilities.

Actress Fay Wray has died in her Manhattan apartment. She'll always be remembered as the object of King Kong's affection. Fay Wray was 96 years old.

In money news, is Delta Airlines heading for bankruptcy? The airline says if costs cannot be cut, Chapter 11 may be next. Delta's pilots rejected the company's latest request for $1 billion in concessions.

In culture, Uncle Donald is going Hollywood. Donald Duck is the latest celebrity to get a star on the Hollywood Walk of Fame. Mickey Mouse was the first animated character to receive a star, back in 1978.

In sports, the Dolphins may want about $5 million back from recently retired running back Ricky Williams. The "Miami Herald" reports that his contract said he'd pay back incentive money if he retired early.

Ouch -- Chad.

(WEATHER REPORT)

COSTELLO: Those are the latest headlines for you.

Three days and counting. Olympic Chairman Jacques Rogge says everything is in place for Friday's opening ceremonies. When the games begin, more than 10,000 athletes will compete for fame, admiration, and, of course, for gold. But what happens after the games are over?

Beijing bureau chief Jaime FlorCruz looks at two Chinese stars who learned that there's more to life than sports.

(BEGIN VIDEO TAPE)

JAMIE FLORCRUZ, CNN CORRESPONDENT (voice-over): All wired up for her TV talk show, Sang Lan taped segments in advance of the Athens Olympics. "To find out how the Chinese Olympians perform," she says, "we'll bring you the latest."

She once dreamed of competing in the Olympics.

SANG LAN, FORMER CHINESE GYMNAST (THROUGH TRANSLATOR): An athlete's most important goal is to win an Olympic gold. But I was so unfortunate, I could not fulfill such a dream because of my injuries.

FLORCRUZ: The star gymnast was injured and left paralyzed while competing at the Goodwill Games in New York six years ago. She's been bound to a wheelchair ever since. But her drive to get better remains undiminished. She now studies journalism at the prestigious Peking University, attending lectures in buildings rarely equipped with elevators. Internet savvy, she keeps up with the latest news to prepare for her talk show with sports celebrities.

LAN (THROUGH TRANSLATOR): I use the endurance and vigor that I learned during my training to help me now in life and work.

FLORCRUZ: Xuan is another star gymnast trying to carve out a new career. She was 21 when she won three golds at the Sydney Olympics four years ago, catapulting her to national hero stature. Liu has since cashed in on her Olympic fame, clinching advertising contracts from a Chinese liquor company and starring in movies and TV dramas. She also studies journalism at Peking University, where she is often stopped to pose for pictures or sign autographs.

She's now an entertainment celebrity, but her ambitions remain Olympic related.

LIU XUAN, CHINESE STAR GYMNAST (THROUGH TRANSLATOR): One of my wishes is to become a reporter and another is to become a gymnastics judge. If neither comes true, I'd like to be a volunteer for the 2008 Olympics.

FLORCRUZ (on camera): That will be held in Beijing and these two retired gymnasts are looking forward to taking part in it, even if only on the sidelines.

Jaime FlorCruz, CNN, Beijing.

(END VIDEO TAPE)

COSTELLO: The king lives. Well, not really. But he did used to hang his hat here. Up next, we'll show you renovations to the king's lair.

And keep those e-mails coming. The Question of the Day -- who should be responsible for policing Internet spam? We'll read your comments out of the break. The address daybreak@cnn.com. That's daybreak@cnn.com.

And you are watching DAYBREAK for a Tuesday.

(COMMERCIAL BREAK)

COSTELLO: It's time to check out our Web Clicks of the morning, where we go to cnn.com to see what stories are really getting your attention.

We get so many hits on cnn.com it's amazing.

MYERS: Oh, yes, millions and millions, literally, a day.

COSTELLO: It's insane.

MYERS: Yes.

COSTELLO: So the top three stories today, the first one, Greek tragedy. And this is a Greek tragedy. Apparently a boyfriend and girlfriend in Greece were having an argument.

MYERS: You know what the argument was about? Who was going to get to play Solitaire on the computer.

COSTELLO: Yes. And it escalated out of control. She went out to the balcony and jumped off. She was in critical condition. She's a member of the judo team in the Olympics.

MYERS: Right.

COSTELLO: So she's in the hospital now. Her boyfriend was just so depressed that he, too, jumped off the balcony a few days later. He's also in critical condition in the hospital this morning. So that's the most popular story on cnn.com. The next popular story surprised me, actually.

MYERS: Very surprising we got so many clicks on this. They found the deepest hole in an area of Croatia, a 1,700 foot vertical drop. There are deeper caves that they've found in Croatia. Croatia is a very rugged country, I mean big mountains. You know, you're part of the Alps there as you get on the other side and a 1,700 foot vertical drop. Spelunkers down there looking at the cave found an unknown leach.

COSTELLO: It must be incredible. So that's the second most popular.

The third most popular story, al Qaeda arrests.

MYERS: Yes.

COSTELLO: You have 1,000 computer disks and this came from, of course, Mohammed Khan. That's third on the list, which kind of surprised me. I thought that would be number one. But no.

MYERS: That's for tracking down all those people that are on there, all his contacts and stuff like this.

COSTELLO: Yes, everyone -- British authorities and also American authorities are going over those disks right now.

And we'll have more on that later on DAYBREAK.

Time for our DAYBREAK "Eye-Opener" right now.

In just a few hours, Elvis fans will have another sacred site to visit. The newly renovated teenaged home of Elvis Presley opens for tourists today. The apartment was marked for demolition but was renovated instead, you know, once the owners found out they could make money. It is now listed on the National Historic Register.

Some great pictures out of Brazil for you this morning. About 80 people are struggling to help a beached humpback whale back into the ocean. But so far nothing's been able to budge the 10 ton mammal. Two tug boats are being brought in for a last ditch attempt today. The 35-foot long whale has been beached since Sunday. That is quite a sight.

This Texas man may think he's a sea mammal. Sixty-one-year-old Paul Ellis took 16 hours to complete the 35-mile swim from Cozumel Island to Cancun. Sixty-one. The grandfather says he made the trip to promote the protection of coral reefs. It was his second try.

MYERS: Oh, the coral reefs around Cozumel are amazing.

COSTELLO: Oh, aren't they?

MYERS: And you float. You don't even have to swim. It just takes you. There's like a two knot current. You just take it all the way along. COSTELLO: Oh, it's so beautiful.

Here's what's all new in the next half hour of DAYBREAK.

The best government your money can buy. The enormous power of lobbyists and the special interest groups in Washington. Who's really in charge?

Plus, breakthrough surgery that changed two kids' lives forever. Hear for the first time from the mother who saw them through.

And New York's high caliber tourist attraction, armed and glamorous.

This is DAYBREAK for Tuesday.

(COMMERCIAL BREAK)

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Aired August 10, 2004 - 05:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: In Iraq this morning, a radical Shiite cleric's militia refuses to relent. This morning, the possibility of a full scale U.S. offensive.
It is Tuesday, August 10.

This is DAYBREAK.

And good morning.

From the CNN Global Headquarters in Atlanta, I'm Carol Costello.

Now in the news, there is fresh fighting this morning in Iraq's holy city of Najaf. U.S. forces have been battling Shiite militiamen there for six days now. Explosions and gunfire are being heard in the heart of Najaf.

They have released their final report. Now they say it's time to act on it. Several hours from now, the leaders of the panel that probed the 9/11 attacks will appear before a House committee. They'll be urging Congress to implement the report's recommendations.

Star prosecution witness Amber Frey takes the stand today. Frey was Scott Peterson's mistress when his wife Laci disappeared. The focus today will be on phone calls with Peterson that she secretly recorded.

Tropical storm Bonnie is lying over the ocean, so to speak. The storm is expected to start moving north some time today. Bonnie took shape Monday in the southern Gulf of Mexico.

Keeping you informed, CNN, the most trusted name in news -- Chad.

CHAD MYERS, CNN CORRESPONDENT: Why are you doing the weather? That was my job. That was my map.

COSTELLO: You know I like to hog the limelight.

MYERS: Good morning, Carol.

COSTELLO: Good morning.

MYERS: Yes, Bonnie now. Bonnie is in the Gulf of Mexico and there's Charlie down here across parts of the eastern Caribbean, south of Puerto Rico, south of Jamaica, on the other side. This is the one we're worried about, though. This is Bonnie. Not a very impressive looking storm, running into some very dry air out here. But it's forecast to make a big right-hand turn and head right toward Panama City, with winds about 80 miles per hour by the time it gets there. We'll have to keep watching it. It is now forecast to be hurricane Bonnie before it makes landfall. Yesterday, that was not the case. Still only a tropical storm right now. Winds at about 45 miles per hour.

The hurricane hunter aircraft have been in Bonnie all night long. They have not found any intensification. It's still between 40 and 45 miles per hour and the pressure is not getting any lower, which means it's not getting any stronger.

(WEATHER REPORT)

COSTELLO: There is new fighting this morning in Najaf. U.S. troops are again battling Shiite militia in the heart of the holy city. Explosions and gunfire are heard and smoke is seen rising during the morning clashes. You are looking at pictures just into CNN a short time ago.

Our Matthew Chance reports from Baghdad on this latest battle.

(BEGIN VIDEO TAPE)

MATTHEW CHANCE, CNN CORRESPONDENT (voice-over): The holy city of Najaf, now Iraq's worst battleground. In five days U.S. forces, backed by Iraqis, say they've killed more than 360 Mehdi Army fighters here. They're loyal to radical Shia cleric Muqtada al-Sadr now publicly rejecting any negotiation while U.S. troops remain.

MUQTADA AL-SADR, SHIA CLERIC (through translator): I will continue with resistance and I will remain in Najaf. I will not leave. I will continue to defend Najaf as it is the holiest place. I will remain in the city until the last drop of my blood has been spilled.

CHANCE: In Baghdad, too, the Mehdi Army is taking a stand. In Sadr City there have been terrible clashes with U.S. forces but here the militias hijack a police station. Not a shot was fired. Inside the barracks, they rifle through cabinets for useful equipment. Body armor meant to protect the police is stolen. Still, the interim Iraqi government says it's keen to get this militia and its leader to join a political process they've so far rejected.

GEORGE SADA, IRAQI GOVERNMENT SPOKESMAN: You see always the best solution is even not to fight but after we fight the best solution is to cease fire, stop fire and make negotiations.

CHANCE: But there's another way too, fight to the end, and U.S. troops now massed in Baghdad and with full authority in Najaf may be poised to finish it.

(on camera): This confrontation has potentially explosive consequences for Iraq. Reports from Najaf say the fighting is now focused around the Imam Ali Mosque, one of the holiest shrines in Shia Islam where U.S. forces say the Mehdi militia or units of them are holed up inside and launching attacks against U.S. forces there. A strike against that mosque could unleash a very serious backlash amongst this country's majority Shia community.

(voice-over): And, a wrong step could unleash among Iraq's majority Shia a ferocious backlash.

Matthew Chance, CNN, Baghdad.

(END VIDEO TAPE)

COSTELLO: Fighting terror on the home front -- Congress is holding hearings on the 9/11 Commission's recommendations to fight terrorism. Well, just about seven hours from now the panel's co- chairmen are expected to encourage the House Armed Services Committee to implement their recommendations.

And there are questions this morning about the response of Las Vegas government, hotel and casino officials to a possible terrorist threat. The Associated Press says city officials and hotel security personnel were more concerned about tourism and liability than terrorism when informed of videos suggesting terrorists had cased the city's casinos. No public alert was issued.

The city's mayor says he never even knew about the tapes.

(BEGIN VIDEO CLIP)

MAYOR OSCAR GOODMAN, LAS VEGAS, NEVADA: If there's anything that the federal government has that would reflect on the wellbeing and the public safety of folks who live here and folks who visit here and they have not shared it with me and allowed me to go out and tell the world that we're the safest place, they're derelict and they're guilty of malfeasance, misfeasance and they should be imprisoned.

(END VIDEO CLIP)

COSTELLO: Those tapes show al Qaeda operatives videotaping casinos in 1997.

Across the country in Albany, New York, more efforts at finding terrorism. Two mosque leaders arrested in an FBI sting operation last week appear in court today for a bail hearing. They're accused of conspiring to launder money and promote terrorism. The sting involved the plot to obtain a shoulder-fired missile.

New attacks just north of Iraq in Turkey this morning. Two simultaneous explosions rocked two hotels in Istanbul. Two people are dead, seven wounded.

Our Alphonso Van Marsh joins us live on the phone from Istanbul.

Tell us about the fighting there -- Alphonso.

ALPHONSO VAN MARSH, CNN CORRESPONDENT: That's right, I am in front of one of those hotels targeted overnight here, where, as you mentioned, two people were killed. Turkish authorities saying that the two bomb blasts went off at about 1:00 local time. Authorities saying that the local hotel employees got a call maybe just about 10 minutes before those bomb blasts went off, warning them that there was a bomb in one of the rooms.

As you mentioned, two people died. At least seven injured, including non-Turkish nationals, we're understanding, nationals from China, from Holland, the Ukraine.

Where I'm looking right now, they're still very, very busy. Large groups of tourists here. This is the height of the tourist season in Istanbul and in Turkey, and news that these bomb blasts apparently targeting hotels becomes very unnerving, especially considering that earlier on the chief of police in Istanbul told the state run news agency that they believe this is an act of terror.

COSTELLO: I was just going to ask you, Alphonso, who might be behind these attacks?

VAN MARSH: Well, authorities aren't saying anything right now in terms of any known claim of responsibility. We know that the minister of interior is meeting with the governor of Istanbul. We heard a little earlier on from the chief of police of Istanbul, saying that they believe it's a terror attack. But in terms of whether it may be Al Qaeda or other known terrorist elements in the country, that's still unclear.

Some of our viewers might remember that last November there were four suicide car bombings in Istanbul. Over 60 people were killed, including the British consulate in Istanbul. But in terms of any definite terrorist threat, people aren't saying at this point. Just that they suspect that this is terrorism.

COSTELLO: Tell our viewers, Alphonso, why Turkey might be a terrorist target.

VAN MARSH: That's a good question. In terms of Turkey being a terrorist target, it's important to keep in mind that Turkey is what many consider to be the crossroads of Western and Eastern civilization. The country is very keen to join the European Union. That's a very large organization. It's the only Muslim member of NATO. It's a huge popular tourist destination as well as a traditional, for lack of a better term, ally of Israel. They do a lot of business between the two countries. They maintain friendly relations.

You can pick any number of reasons why some would want to consider this a terrorist target. But right now authorities aren't saying, they aren't assigning blame to any particular group.

COSTELLO: Alphonso Van Marsh live on the phone from Istanbul this morning.

Thank you. In news across America this Tuesday, an Ohio woman is suing doctors at the Cleveland Clinic after it was discovered they left a surgical towel inside of her mother. Bonnie Valle died in 2002, seven years after having lung surgery at the clinic. The 18 x 27 inch towel was discovered by medical students who were dissecting the donated body.

Police want to know why a North Carolina teenager had six pipe bombs in his car. Seventeen-year-old Jarrett William Brown was stopped for leaving the scene of an accident. Federal agents then searched the boy's home, where they found more than a dozen similar explosives, as well as bomb making equipment.

Mark Hacking is expected to appear in court today to face charges in the murder of his wife. Court papers say he shot his wife Lori Hacking while she slept and then threw her body in a trash bin. He has been charged with murder and obstruction of justice. The charge carries a maximum life in prison term. Lori Hacking's body has not been found.

Now to the latest in that brutal killing rampage in Florida. State officials have fired four long time state workers. They say the workers missed two chances last week to put in jail the ex-con accused of leading the rampage. Troy Victorino is accused of recruiting three teenagers in the killings. The six victims were found Friday, stabbed and bludgeoned with baseball bats in a blood spattered Deltona home. Officials say Victorino should have been behind bars.

(BEGIN VIDEO CLIP)

JAMES CROSBY, CORRECTIONS SECRETARY: I've learned that Victorino reported to a probation office on Thursday, August the 5th. But the probation officer failed to ask for or seek a warrant for his arrest. There is no excuse for this inaction.

(END VIDEO CLIP)

COSTELLO: Authorities say a dispute over an Xbox video game system and some clothes sparked the killings.

It is the testimony everyone has been waiting for, or so it seems. Scott Peterson's mistress is scheduled to take the stand today.

CNN's Ted Rowlands takes a look at what Amber Frey may reveal while she's on the witness stand.

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UNIDENTIFIED FEMALE: You're not going to be giving her...

TED ROWLANDS, CNN CORRESPONDENT (voice-over): The conversations Amber Frey secretly taped with Scott Peterson are expected to be at the heart of her testimony, which is scheduled to begin in the morning.

According to Frey's attorney, Gloria Allred, those audiotapes will have an impact on this case.

GLORIA ALLRED, AMBER FREY'S ATTORNEY: The prosecution can argue that there is a motive for murder, and we will see how Scott Peterson wormed his way into her life and into her heart.

ROWLANDS: Frey, according to a source familiar with the case, has been in Redwood City since Sunday, going over testimony with prosecutors. Her father says she's ready.

RON FREY, AMBER FREY'S FATHER: She's 100 percent prepared, and she'll be able to deal with questions from the defense attorney, Mr. Geragos. Not a problem.

ROWLANDS: Amber Frey started taping conversations with Peterson six days after his wife, Laci, was reported missing. Sources familiar with the recordings say that Peterson told Frey dozens of intricate lies that are captured on tape.

CHUCK SMITH, LEGAL ANALYST: The more bizarre, the more strange his statements to her are, the better it is for the prosecution.

ROWLANDS: Meanwhile, CNN has learned that the focus of what the defense in this case is calling potentially exculpatory evidence revolves around a plastic tarp recovered with Laci Peterson's remains. According to a source close to the case, the first authorities on scene said the tarp smelled like a corpse. The defense is testing that tarp and maintains that if the tarp was used in the crime, it may help to clear Scott Peterson.

(on camera): Amber Frey is scheduled to be the first witness in the morning. It is expected that she will be on the witness stand for more than a week.

Ted Rowlands, CNN, Redwood City, California.

(END VIDEO TAPE)

COSTELLO: We will have much more on the Peterson case coming up in the second half hour of DAYBREAK. Our legal analyst Kendall Coffey will join us for some Coffey Talk and talk about the impact Amber Frey's testimony may have on the jury.

Let's take a look now at something that's probably driving you absolutely nuts -- spam. You know those pesky unsolicited e-mails? Some try to sell you stuff by making false claims. Others are just plain vulgar or pornographic.

Last year, President Bush signed an anti-spam law. But some say it is not working.

(BEGIN VIDEO CLIP)

MICHAEL GOODMAN, BUREAU OF CONSUMER PROTECTION: Canned Spam is not going to affect the amount of messages that consumers receive to any large degree. We have said all along that legislation, whether it be Canned Spam or something else, is not going to be the silver bullet for the spam problem.

(END VIDEO CLIP)

COSTELLO: That certainly brings us to our e-mail question of the morning -- who should be responsible for policing Internet spam? E- mail us at daybreak@cnn.com and we will read your responses throughout the morning. Again, who should be responsible for policing Internet spam? E-mail us at daybreak@cnn.com.

Staying in the game even after throwing in the towel. Meet some athletes who are holding onto Olympic dreams despite no hopes of competing. That's at 18 minutes past the hour.

At the bottom of the hour, political donors find out what big businesses are buying with their huge campaign contributions.

And at 48 minutes after, it looks like separation success. Formerly conjoined twins are recovering better than doctors dared to expect.

But first, here's a look at what else is making news this Tuesday morning.

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COSTELLO: U.S. stocks will open flat this morning, as investors are a little uncertain about today's expected interest rate hike. The Dow closed just above 9814. The Nasdaq dipped 2 1/4 points, to close at about 1775. And the S&P 500 ended at 1065.

Let's take a look at some overseas numbers, too. Japan's Nikkei closed up nearly 45 points. In Europe, Britain's FTSE Index was up about 23 points and the French CAC was up just over 12 points.

Your news, money, weather and sports.

It is 5:17 Eastern.

Here's what's all new this morning.

Two surveillance tapes seized after 9/11 reportedly show terrorists cased Las Vegas casinos. But the Associated Press says it obtained documents showing discussions between local and federal officials did not center on public alerts or beefed up security. Instead, authorities worried about tourism legal liabilities.

Actress Fay Wray has died in her Manhattan apartment. She'll always be remembered as the object of King Kong's affection. Fay Wray was 96 years old.

In money news, is Delta Airlines heading for bankruptcy? The airline says if costs cannot be cut, Chapter 11 may be next. Delta's pilots rejected the company's latest request for $1 billion in concessions.

In culture, Uncle Donald is going Hollywood. Donald Duck is the latest celebrity to get a star on the Hollywood Walk of Fame. Mickey Mouse was the first animated character to receive a star, back in 1978.

In sports, the Dolphins may want about $5 million back from recently retired running back Ricky Williams. The "Miami Herald" reports that his contract said he'd pay back incentive money if he retired early.

Ouch -- Chad.

(WEATHER REPORT)

COSTELLO: Those are the latest headlines for you.

Three days and counting. Olympic Chairman Jacques Rogge says everything is in place for Friday's opening ceremonies. When the games begin, more than 10,000 athletes will compete for fame, admiration, and, of course, for gold. But what happens after the games are over?

Beijing bureau chief Jaime FlorCruz looks at two Chinese stars who learned that there's more to life than sports.

(BEGIN VIDEO TAPE)

JAMIE FLORCRUZ, CNN CORRESPONDENT (voice-over): All wired up for her TV talk show, Sang Lan taped segments in advance of the Athens Olympics. "To find out how the Chinese Olympians perform," she says, "we'll bring you the latest."

She once dreamed of competing in the Olympics.

SANG LAN, FORMER CHINESE GYMNAST (THROUGH TRANSLATOR): An athlete's most important goal is to win an Olympic gold. But I was so unfortunate, I could not fulfill such a dream because of my injuries.

FLORCRUZ: The star gymnast was injured and left paralyzed while competing at the Goodwill Games in New York six years ago. She's been bound to a wheelchair ever since. But her drive to get better remains undiminished. She now studies journalism at the prestigious Peking University, attending lectures in buildings rarely equipped with elevators. Internet savvy, she keeps up with the latest news to prepare for her talk show with sports celebrities.

LAN (THROUGH TRANSLATOR): I use the endurance and vigor that I learned during my training to help me now in life and work.

FLORCRUZ: Xuan is another star gymnast trying to carve out a new career. She was 21 when she won three golds at the Sydney Olympics four years ago, catapulting her to national hero stature. Liu has since cashed in on her Olympic fame, clinching advertising contracts from a Chinese liquor company and starring in movies and TV dramas. She also studies journalism at Peking University, where she is often stopped to pose for pictures or sign autographs.

She's now an entertainment celebrity, but her ambitions remain Olympic related.

LIU XUAN, CHINESE STAR GYMNAST (THROUGH TRANSLATOR): One of my wishes is to become a reporter and another is to become a gymnastics judge. If neither comes true, I'd like to be a volunteer for the 2008 Olympics.

FLORCRUZ (on camera): That will be held in Beijing and these two retired gymnasts are looking forward to taking part in it, even if only on the sidelines.

Jaime FlorCruz, CNN, Beijing.

(END VIDEO TAPE)

COSTELLO: The king lives. Well, not really. But he did used to hang his hat here. Up next, we'll show you renovations to the king's lair.

And keep those e-mails coming. The Question of the Day -- who should be responsible for policing Internet spam? We'll read your comments out of the break. The address daybreak@cnn.com. That's daybreak@cnn.com.

And you are watching DAYBREAK for a Tuesday.

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COSTELLO: It's time to check out our Web Clicks of the morning, where we go to cnn.com to see what stories are really getting your attention.

We get so many hits on cnn.com it's amazing.

MYERS: Oh, yes, millions and millions, literally, a day.

COSTELLO: It's insane.

MYERS: Yes.

COSTELLO: So the top three stories today, the first one, Greek tragedy. And this is a Greek tragedy. Apparently a boyfriend and girlfriend in Greece were having an argument.

MYERS: You know what the argument was about? Who was going to get to play Solitaire on the computer.

COSTELLO: Yes. And it escalated out of control. She went out to the balcony and jumped off. She was in critical condition. She's a member of the judo team in the Olympics.

MYERS: Right.

COSTELLO: So she's in the hospital now. Her boyfriend was just so depressed that he, too, jumped off the balcony a few days later. He's also in critical condition in the hospital this morning. So that's the most popular story on cnn.com. The next popular story surprised me, actually.

MYERS: Very surprising we got so many clicks on this. They found the deepest hole in an area of Croatia, a 1,700 foot vertical drop. There are deeper caves that they've found in Croatia. Croatia is a very rugged country, I mean big mountains. You know, you're part of the Alps there as you get on the other side and a 1,700 foot vertical drop. Spelunkers down there looking at the cave found an unknown leach.

COSTELLO: It must be incredible. So that's the second most popular.

The third most popular story, al Qaeda arrests.

MYERS: Yes.

COSTELLO: You have 1,000 computer disks and this came from, of course, Mohammed Khan. That's third on the list, which kind of surprised me. I thought that would be number one. But no.

MYERS: That's for tracking down all those people that are on there, all his contacts and stuff like this.

COSTELLO: Yes, everyone -- British authorities and also American authorities are going over those disks right now.

And we'll have more on that later on DAYBREAK.

Time for our DAYBREAK "Eye-Opener" right now.

In just a few hours, Elvis fans will have another sacred site to visit. The newly renovated teenaged home of Elvis Presley opens for tourists today. The apartment was marked for demolition but was renovated instead, you know, once the owners found out they could make money. It is now listed on the National Historic Register.

Some great pictures out of Brazil for you this morning. About 80 people are struggling to help a beached humpback whale back into the ocean. But so far nothing's been able to budge the 10 ton mammal. Two tug boats are being brought in for a last ditch attempt today. The 35-foot long whale has been beached since Sunday. That is quite a sight.

This Texas man may think he's a sea mammal. Sixty-one-year-old Paul Ellis took 16 hours to complete the 35-mile swim from Cozumel Island to Cancun. Sixty-one. The grandfather says he made the trip to promote the protection of coral reefs. It was his second try.

MYERS: Oh, the coral reefs around Cozumel are amazing.

COSTELLO: Oh, aren't they?

MYERS: And you float. You don't even have to swim. It just takes you. There's like a two knot current. You just take it all the way along. COSTELLO: Oh, it's so beautiful.

Here's what's all new in the next half hour of DAYBREAK.

The best government your money can buy. The enormous power of lobbyists and the special interest groups in Washington. Who's really in charge?

Plus, breakthrough surgery that changed two kids' lives forever. Hear for the first time from the mother who saw them through.

And New York's high caliber tourist attraction, armed and glamorous.

This is DAYBREAK for Tuesday.

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